Nasir and Matt kick off this week's episode by discussing Microsoft partnering with Foursquare. They also talk about Texas A&M licensing use of the "12th Man" to the Seattle Seahawks, the FTC going after a mega spammer, and the backlash by developers of King.com's "candy" trademark. Nasir and Matt answer questions about legal concerns of running a virtual business, whether to have an employee handbook, and starting an LLC with your spouse.

From Pasha: That website I was talking about that shows how you can mess with Nigerian scammers. Check out their trophy room with some interesting pictures of the scammers themselves.

Transcript:

NASIR: Hi! Welcome to Legally Sound Smart Business!
This is Nasir Pasha.
MATT: And this is Matt Staub.
NASIR: And we’re ready for our next episode. We’re actually recording on a Thursday. That’s a little unusual. We’re usually on Fridays, thanks to our audio producer going on vacation for the week or something.
MATT: You know, he could just cut this out since he does all the audits. But, if he chooses to leave it in there, it should be known that he does a great job.
NASIR: Except, apparently, he has, like, vacation any time he wants.
MATT: That would be nice.
Also, another thing, after listening to the last episode, I’m going to stop doing future predictions because, at the beginning of last episode, I said how great a Super Bowl it was, and then it turns out the Super Bowl was awful.
NASIR: It was way off, but I was right. My predictions were correct. The commercials were great. There was that one car commercial with the food and funny stuff. So, yeah, I was right on the ball on that one.
MATT: So, I’ll stop doing that – at least until it falls right before another big event that I’ll do the same thing again.
Okay, let’s get into the first article here, and this is a pretty interesting one. It deals with a couple of pretty big companies. We have Foursquare and Microsoft.
NASIR: Yeah, Foursquare, I don’t use it anymore, but I know that it’s still something that a lot of retail and restaurants still use, and you get certain benefits of checking in and all that. But this is a big deal. Foursquare’s data is awesome. They are competitors to Yelp and Google Maps in the sense that they have all this information for a ton of businesses. The problem is I don’t think Foursquare is doing as well as they were doing not too long ago, but they licensed the data to Microsoft which is a big deal for about 15 million dollars.
MATT: I’m kind of surprised that one of these other bigger companies hadn’t already bought them before. I just assumed they’d already been bought up by a Google or Microsoft – something like that. It’s a little bit surprising to me. Maybe it’s just because I’ve tailed off a little bit.
NASIR: Yeah, I think I recall, they may have been offered some deals in the past, but really hasn’t gone anywhere. But I just wanted to point out the difference between purchasing and licensing.
This may be an obvious thing but, when you license any kind of intellectual property – whether it is information or trademark which we’re going to talk about later in the show – you still retain the ownership. And so, you’re allowing some other party some rights to that data. So, in this case, Microsoft doesn’t own that data. They can use it under the terms of the deal. I definitely know it’s not permanent. I definitely know it’s restricted on how they could use it. And so, this is a big win for Foursquare in that sense and relative to being purchased or being bought out altogether probably.
MATT: It sounds like it’s better than just a straight up purchase anyway because at least now you can license it. What was the deal? 15 million, I think?
NASIR: Yeah, and it includes a database of more than 60 million entries and five billion check-ins. By the way, I assumed it was the restaurants and things like that, but it’s also our user data too as well. It looks like they’re a growing database of user reviews. So, I’m sure they’re going to use all those reviews that you’ve left on Foursquare to be mixed in.
I believe the same thing happened with Google Maps. What they did is they bought Zagat and purchased it all together. Now, when you search for these restaurants – which is a huge data pool, they’ve been around for ages, reviewing restaurants, and just put a write into their system.
MATT: Yeah, it sounds like this will be a pretty mutually beneficial relationship. I mean, Microsoft is getting this huge, essentially, database of information and Foursquare is getting money for having that information. That’s pretty solid. That’s essentially what a licensing deal is. So, it’ll be interesting to see how I guess Microsoft is able to use this information or use Foursquare to improve its already existing business model. But I’m on board with this.
NASIR: You know, one of my clients a long time ago – about four or five years ago – when they were starting out, one thing that the CEO kept telling me is that Google is not a search engine. They’re a data company. Their value is in how much data they have. I never really understood that, and that was a long time ago. But, now, the whole concept of big data and giving some value to that and being able to utilize that information is huge, and that’s why this is worth what it is – 15 million dollars.
MATT: Yeah, I should have just started accumulating data a long time ago. I could have been worth lots of money. But it’s a mistake. If I ever make that time machine, I’ll do that.
NASIR: Hindsight is 20-20.
MATT: All right. Well, let’s jump into the first question here.
“I’m looking to start a website that will sell products on it. We will be completely virtual – no brick and mortar. What legal issues do I need to consider? Also, I’m selling artwork.”
From someone in Texas.
NASIR: So, you need a brick and mortar or place. But, when you are conducting a business under an entity, you need some address, and the reason is because every state, when you register a corporation or LLC, there’s something called a registered agent or a registered agent for service or process. That’s the person that needs to be delivered the lawsuit in the event that happens. And so, that person usually is required to have an actual, not just a mailing address, but some kind of street address as well.
Some states allow you to have the secretary of state as the agent for service or process, especially if you’re outside of the state, but then you still need some kind of mailing address, usually, as well.
MATT: Right, and I guess – let’s see – what are they asking? “
What other legal issues do I need to consider?”
That’s obviously very important for setting up the entity, but I would think that a very solid terms and conditions of use of website or some sort of terms of sale when someone purchases something. It would probably be an area you really need to focus on, on the legal side.
NASIR: Well, yeah, absolutely. Return policy – I don’t know if you already mentioned that.
Also, if you’re selling artwork, I suppose copyright issues are going to come up. I don’t know if they’re original artwork or if they’re reproductions and what-have-you. If they are reproductions especially, make sure that you have the correct copyright and that it’s assignable, that it’s transferrable, that it’s reproducible.
For example, putting on a picture of an artwork on your website – whether or not you sell it or not – may even be copyright infringement as well.
MATT: Right.
I would also suggest, wherever you’re located in Texas, finding a good CPA because there’s going to be some tax issues with this as well, so you want to make sure you get all that squared away. This isn’t an attacks podcast, but…
NASIR: Yeah, that’s true because some states are starting to require retailers to actually hold sales tax or charge their customers sales tax and all that and that’s that moving target when it comes to the law as well. California is one of those, and so that’s definitely something to look into as well.
MATT: Speaking for someone who purchases probably hundreds of thousands of dollars of artwork online a year, there’s some websites that are really good and some that are really poor. I guess it just depends on the quality of the art.
NASIR: That’s very good.
MATT: You really liked that one. I can tell.
NASIR: That’s true.
MATT: After that pizza joke on the last, I’m hesitant to make any other jokes. I’ll just jump right into the next article.
I did mention the Super Bowl at the beginning of this podcast. For anyone that paid attention to the two weeks leading up to it, it was kind of hard not to at least hear about it at one point. Or at least during the season. If you’re familiar with Seattle, they’re all about this 12th Man thing. So, I’ll explain this to you, Nasir.
There’s 11 players on the field for one team. And so…
NASIR: No, I get it, I get it, I get it.
MATT: 12th Man is the crowd. But I actually didn’t know about this until this year when I saw this recently popping up – probably because Seattle was becoming a very hot topic. I mean, they’ve been relevant. But, you know, they obviously just won the Super Bowl. That’s huge. They said 700,000 fans at a victory parade yesterday. So, this is a prime time to bring it up.
This 12th Man is actually owned, the phrase is owned by Texas A&M, the college football team, and they licensed out usage of this 12th Man to Seattle.
I think the initial deal was Seattle was using it and Texas A&M said they were infringing on their trademark, so they paid him $100,000 and then $5,000 a year licensing fee which seems pretty low considering how much money NFL teams make, but I guess they renew that deal for another five years. It’s through 2016.
But, now, the question is, this is a lot more popular. They’re using it all over the place. Texas A&M has a couple of options now.
NASIR: Yeah, I think one of the reasons why it was a low price was that, I don’t know if Seattle even knew how popular this 12th Man concept was going to get. And then, second, there’s a lot of limitations on the actual use. And so, now, when you own a trademark and you’re licensing out, you have the choice to restrict how you want it, so long as they’re willing to agree to it. And so, they had regional limitations. They could only use it in Alaska, Hawaii, Idaho, Montana, Oregon, Utah, and of course Washington – pretty much the Pacific Northwest – and that’s it. But I noticed too that, when people were covering the story, they didn’t contemplate the internet even though this was done in 2006. But they didn’t contemplate social media in the same way. So, they had to figure out compliance of the licensing agreement because of Twitter and Facebook of the actual use of this mark.
MATT: Right. Yeah, I found that pretty interesting, too. I think Seattle was running these social media… Well, I don’t know if it was Seattle, but there was social media out there with nearly 1.5 million likes on Facebook and 431,000 followers on Twitter, 350,000 on Instagram – all relating to this 12th Man.
If I was Texas A&M, I would just raise that price. Like I said, NFL teams make so much money that they’ll probably just pay it, then they keep those restrictions. Like I said, there are geographic limitations on there in that they can’t sell merchandise with the words “12th Man” on it even though I’m sure there’s tons of other companies that are not Seattle Seahawks that are selling merchandise with that on there.
NASIR: Yeah, absolutely, and this shows you the value of a trademark, really, in its true form. On one hand, Texas A&M, a very large football franchise from the college perspective, but they were able to restrict an NFL team from using their mark, and that’s a pretty big deal.
But notice that the only way that you can actually have value with your trademark is to enforce it in the sense that, if Washington would have just went ahead and used it, it could actually hurt the Texas A&M’s right to its own trademark if it were to allow that. So, by actually filing a lawsuit and so forth, they were actually able to give a message to everyone because, I mean, 12th Man is not a unique concept to Texas A&M. It frankly could be used in every football game and every football team franchise or any other sport that requires 11 people.
Are there any other sports with 11?
MATT: Yeah, I think there’s some form of rugby. Soccer I believe has 11 per side and I believe there’s some form of rugby that has 11. But you’re exactly right and that’s how this started.
Seattle was using it. Texas A&M came after them, saying that they’re infringing on it. And then, it got involved in a lawsuit and they did this licensing deal. It’s pretty weird in sports. Like, you were just hitting on 12th Man. Sixth man in basketball. I know everyone uses that.
NASIR: Yeah.
MATT: I don’t know if you knew about this – Pat Riley, when he was coaching with the Lakers, he trademarked the phrase “threepeat” which was winning three straight championships. When teams did that later on, if they were producing merchandise or using that, they were actually infringing on the trademark. It’s pretty weird. We’re actually going to get to a pretty interesting story here at the end of the podcast dealing with trademarks. I don’t want to step on this too much.
NASIR: No, don’t give it away. They have to stay until the rest of the podcast, and they can’t fast-forward. You don’t have that capability.
MATT: So, we’ll just move on then to the next question, so we can get to it quicker.
NASIR: Okay, let’s just race through it so we can get to that article.
MATT: This comes from a printing shop in Laguna Hills, California.
“I just hired my first couple of employees. Do I need an employee handbook?”
Short and sweet question.
NASIR: That is short and sweet.
I personally hate those handbooks, and we drew them all the time. But the reason I hate them is because they’re full of so much information that, a lot of times, is very hard for even employers to follow it in the sense that, a lot of times, our clients, what they’ll do – at least before they become a client – is they’ll go out to some HR company and they’ll draft up some border plate handbook for them.
The problem is that, sometimes, it’s very convoluted and has a lot of details in there and it just sits on a shelf and it just sits there. Really, that doesn’t make any sense because understand what the purpose of a handbook is.
First of all, there’s no requirement for a handbook – even when you have a lot of employees – because, more important than you have one, the purpose of the handbook is to communicate your policies to your employees. That’s the number one goal.
And so, if your handbook is not readable, it’s just sitting on a shelf, or it’s too thick, it’s not really serving its purpose. But there are a lot of benefits. For example, that’s where you’re going to outline your vacation time; your vacation policies; your benefits, if you have any; your sick pay; your PTO time. Also, specify that they’re an at-will employee. So, specify that they’re an at-will employee. This, also, in a lot of ways, replaces having to have some kind of standard form employee agreement as well.
MATT: You hit on some good things there.
It’s good to have it. You don’t have to have it. It’s good to have it if you want to lay out those policies, basis for termination, and things of that nature. I kind of look at it as almost legal protections, but with the caveat that, if you have it in there, you need to follow it. So, it’s a way to kind of protect you in a sense, legally, but you have to follow your own handbook. So, be familiar with that, I guess. Don’t just give them something you don’t know what’s in there and then be doing the wrong thing. Then, it’s even worse.
NASIR: Absolutely.
MATT: So, what should we tell this person? Yes or no?
NASIR: Oh, that’s a good question. Let’s answer the question. That’s a good idea.
MATT: They just hired the first couple of employees. That’s the situation. They’re a printing shop.
NASIR: Couple means two, right? I mean, there’s always this argument – couple, few, and so forth. Few means three in my mind and couple means two. So, two employees, I mean, you have the option to get an employee handbook.
Would I recommend someone spend the money and make great efforts to do so at that point? Not necessarily. It’s not a lawyer answer because every lawyer is going to tell you, “Yes, you should have one.” But it’s kind of one of those things where, as you get more employees, the more imperative that you do need to have one.
I think, by the time you get to five employees, you should really, really have one. But, under five, I don’t know. I think it’s more important to make sure that you set out the policies, right? With two employees, you’re managing them directly. You can communicate with them directly. Sending out weekly, monthly memos of change of policies like some big corporation doesn’t make sense either.
So, really, you’re already in kind of an informal relationship. But formalizing that into writing is definitely a good idea. I’m not going to discourage someone from doing that, but it’s a matter of cost benefit analysis of whether you want to pay someone to get that done.
MATT: I guess it also depends on how hands-on you want to be as a manger. I worked for an attorney during law school. I was sole practitioner and I was the only other person doing law. He’s like, “Well, if you have any questions, just look in this book,” and it was this handbook he had compiled. It wasn’t an employee handbook per se, but it was just a book of all these instructions that I guess he just didn’t want to spend time answering. So, he’s like, “Any answer is in here. If not, then you write it yourself and put it in.” All right, well, that’s easy enough, I guess.
NASIR: Well, one thing to not do, though, is go on the internet and get an employee handbook from online. I’ll tell you the reason why. I know you would be tempted to do so and, especially what I said, it is costly to have someone make something just for you.
But, first of all, everything is different state by state, especially with employment laws. Everything differs, depending on how many employees you have. Employment law notoriously changes every year. And so, almost always, when we have a new client and they have an employment handbook, it hasn’t been updated in a while, and that’s another thing. Once you have one, you have to make sure it’s updated. And so, so many times, I see people with policies in there that are illegal.
We have a good example where the employee handbook outlined when an employee would be paid, ad this client had commissions for their sales team, and it said something like they’d be paid, whether or not the money was earned or not, every month or every two months or something strange like that, and that’s a problem because you have to have your employees on a regular payment period of two weeks. And so, these are the kind of things that you’d want to avoid, and you could have easily gotten that from the internet and used it and fallen in to trouble.
MATT: There you go. I still don’t know if you’ve answered it – the question – but that’s fine.
NASIR: Yeah.
MATT: It’s a judgment call for them.
Yeah, let’s hop into this next story here.
NASIR: We missed our break. Are we not taking a break?
MATT: Uh, do you have something to talk about?
NASIR: I just like just sitting here for a while. We can just have a minute of silence for our listeners.
MATT: I started P90X yesterday. So, maybe every week I can keep the listeners updated with how I’m doing in it.
NASIR: Oh, that’ll be interesting.
Now, I’ve gone through Insanity which was pretty good. Now, I just run three miles a day and I’m satisfied. But P90X, actually, I’ve heard Insanity is harder than P90X, but that’s according to Tyler Sickmeyer of Fidelitas Development.
MATT: How long is that program?
NASIR: I think it’s two months total.
MATT: Okay. Well, this is three months.
NASIR: Actually, I think Insanity is ten months.
MATT: It’s a life. It’s a lifetime.
I did it because it seemed cheaper. Basically, one of my friends talked me into it earlier this week. And then, it’s also cheaper than joining a gym. So, I figured it was worth a shot, and I had a $100 Amazon gift card. So, I needed to spend that at some point.
NASIR: Oh, okay, that’s a good excuse.
MATT: So, I may as well give updates from time to time on how that’s going.
I’m going to say, “Day one, down. I feel pretty good.”
NASIR: Now you have to. How do you measure it? How are we going to measure how well you’re doing?
MATT: I’ll post the shirtless pictures every week, like they recommend.
NASIR: Before and after?
MATT: They recommend that in the P90X guide. It’s like they want you to take a before picture and then do all these measurements, things of that nature. I didn’t do any of that. I don’t even know how to record what my vertical jump would be without having someone help me. So, I recorded my numbers from when I did the program, so we’ll see how that goes.
NASIR: Okay, we’ll just be geeky about it and look at the numbers.
MATT: All right, well, now we’ll get into our third story, and this is something that people will appreciate because I don’t know if anyone who enjoys receiving spam in any form.
The FTC settle with a spammer who apparently sent millions of deceptive text messages. Now, what exactly was he or she sending? Sending this message: “You’ve been selected for a $1,000 Walmart gift card. Enter the code “FREE” at whatever web address to claim your prize. 161 left.” So, putting some urgency in there, too. Apparently, people fell for this.
NASIR: I know.
MATT: Enough that I think even – let’s see – $185,000 worth he got.
NASIR: Oh, gosh, that’s embarrassing.
MATT: But this is a pretty big deal because this is mass spamming and I guess he maybe bought a list of people’s phone numbers. I don’t know how you even get the phone numbers out to do them.
NASIR: I honestly don’t get how they get these numbers – unless maybe they’re dialing them randomly because I use Google Voice – again, I’m a computer geek – but, when people text that number, it’s filtered through Google Spam. So, I never get them. But I still have a regular cellphone number which I never use, I never give out to anyone. And so, I still get spam texts through that number. Somehow, they’re either hacking into Verizon or getting random numbers. I have no idea, but I get these probably once or twice a month. I assume I’m not the only one.
MATT: Yeah, I get those as well. I also use Google Voice. Actually, I give out my cellphone number to a decent amount of people, so I don’t know. Sometimes, I don’t even know what I’m getting spammed through.
NASIR: I have too many stalkers.
MATT: So, this person sent out – let’s see – I can’t remember if there was an exact number or range of how much they sent, but I wonder if there’s a threshold of how much someone is going to be able to send out before the FTC comes after them.
Obviously, this is good news for the average person because no one wants to get spammed.
NASIR: Well, I don’t know if it’s fortunately or unfortunately, I’ve had a client that had a run in with the FTC. This was a while ago. For something that they did a long time ago regarding faxes. You know, the old form of spam which was to just mass fax everyone. I found that they don’t usually get involved unless they get a number of complaints – not just one, not just two – at least a dozen. Most people don’t complain. And so, you need to really get up there in order to get any kind of effort on that. But this is a good time to talk about spam because a lot of people think, “Okay, we get it, but is it illegal or not?” In general, spam is legal, according to federal law, so long as you abide by certain principles. For example, you have to have an unsubscribe link at the bottom; you have to identify your address and things like these, and there’s a whole list of them. But keep in mind there’s also state regulations, too. California is more restrictive. But the problem is that a federal law is said to what’s called preempt any kind of state law because there’s issues of freedom of speech and all this. So, when you get into this area, just be a little careful. Make sure you know what you’re doing. But then, also, you look at who’s enforcing it.
So, there’s the FTC and the FCC. The FCC is actually the ones that cover these text messages though it’s the FTC which went after this company – not because of spam texting but because of the fact that it was deceptive because it’s unfair trade practice. I don’t know if that was interesting to anyone, but I find it fascinating.
MATT: No, they did say that in the stipulation, the final judgment how it was deceptive because he was representing these… First, I’m sure there wasn’t even Walmart gift cards in the first place, but the fact that it was free, obviously, that’s misleading.
What I don’t understand, first, you get a text and you fall for this trick or whatever. But then, it’s like, “Oh, I have your free $1,000 gift card.” “Oh, great!” “I’m just going to need some personal information.” All you would need is an address. I don’ know why you would need all this other information if they were really going to send you something.
NASIR: Exactly.
MATT: So, I guess that’s why this FTC is going after this guy because maybe the average person is more gullible than I think. It’s a good thing, though.
NASIR: Yeah, they’re just relying on the numbers. You know, you send a million texts to people, there’s going to be a few people that are going to actually buy it.
MATT: I just respond that I’m extremely gullible. They text me, I’ll just send them, “Hey, what do you need? Social security number? Bank account? Routing number? I’ll send everything to you. Can you just enter it in for me?”
NASIR: It kind of reminds me, remember when we covered that one attorney that basically got a Nigerian email scam and he ended up wrapping his clients into it.
Anyway, there’s this one website, I’ll find it so I’ll link it – and I always say this, but I never do, but I’ll actually do it this time – there’s a website of people that actually go along with these Nigerian email scams as a joke an see how far they can take it. They make the Nigerian sender do some crazy stuff – like send in pictures and it gets kind of crazy. I’ll post a link but it kind of reminds me of some ways that you can have some fun with these guys.
MATT: Yeah, that is actually pretty funny. Also, telemarketing is kind of like spam. Would you say it’s spam? I don’t know, but it’s akin to it.
NASIR: I’m mixed about it because, at the same time, I know what small businesses have to go through – small and big business – in order to make sales. The reason why people telemarket is because it works. You know, they make sales, and so does spam. Spam works, too. Otherwise, they wouldn’t keep sending it.
MATT: I basically brought that up so I can mention this Seinfeld episode where, a couple of times – and, you know, Seinfeld was in the 90’s when email and everything like that wasn’t that prevalent but – there were a couple of episodes where Jerry would get a call from a telemarketer and he would just use different funny tactics – funny because he’s a comedian – to get rid of them.
One time, they called, and they asked if he was free, and he said, “No, can I call you at home later? Give me your number.” He goes, “Why would I give you my number?” and he’s like, “Exactly.” Something like that and he hung up. It was pretty funny.
NASIR: Yeah, turned it around on him.
MATT: All right, and that’s our TV reference of the week. So, we’ll get into the last question here – another short question from San Diego.
NASIR: A little too short.
MATT: “I’m going to start an LLC with my spouse. Good idea?”
NASIR: Ah, I didn’t realize w were doing a relationship question-and-answer session.
MATT: California is a community property state. I don’t know how much that even plays into it if you’re going to start a business with your spouse. I guess one thing is, if you’re starting an LLC, it’s probably going to be viewed, even though it’s two people, technically, it’s probably going to be viewed as one member, essentially, wouldn’t you say?
NASIR: From a legal perspective, I suppose, yeah. Sometimes, there’s also other benefits I can think of maybe qualifying as a woman-owned business. That could play a part, assuming one of the spouses is a woman. I don’t know what he or she means by “good idea” though. It kind of depends on the circumstance. I would assume they would want the spouse involved because they’re involved in the business, but I don’t think there’s any necessary benefit or harm of including them that I can think of. Can you?
MATT: I’m assuming they’re asking, just from a legal perspective, whether it’s a good idea to get a spouse involved into the business you’re starting. Maybe they’re thinking, if I start the business myself and something goes wrong with this marriage, are they going to get 50 percent of the business anyways? I don’t know what the thought process is, but that’s just one idea.
NASIR: Yeah, that’s true. I guess it would be true if you weren’t n a community property state, but that’s not going to have relevance here. And understand what a community property state meaning that any income or even debts that you acquired during the marriage – this is a general statement – upon divorce is going to be split 50-50. Unless there’s some other prenuptial agreement, unless the property was acquired before marriage or was through inheritance or by gift, in this case, a business that you’re running together or co-owners, it’s going to be community property.
MATT: I don’t know how to really go about answering this question. I’ll just say, yes, it’s a good idea. Go for it.
NASIR: What about tax consequences?
MATT: Well, LLC is a pass-through entity.
What it boils down to for me is, if the spouse wasn’t going to get involved with the business, you’re looking at what the other option is, what’s that analysis as opposed to them both being involved in the business? I guess that’s the big analysis that needs to be done. I mean, from a tax perspective or from a legal perspective, you’ve got to look at it both ways and see what’s more beneficial – having that other spouse involved or not having them involved.
Generally speaking, since it’s a pass-through entity, you know, you’re taxed as you are an individual. And so, for a married couple, you’re going to be taxed as you are the same as you would have been had it been something else. I don’t know if that’s a good answer. It’s not a very thorough answer but any time someone asks me a tax question about which route to take, I always just tell them, “The best thing is just run the numbers both ways and see what’s going to result in lesser tax liability.”
NASIR: There might be an issue, too, if the spouse actually is involved in the business yet they’re not a co-owner and yet they’re not being paid. That might create some issues with not only liability of tax consequences and so forth.
I agree with you. If they’re involved in the business, you might as well make them an owner – whether It’s 50-50 or not, that’s up to you. Also, there’s trust and estates aspects of this, too. Maybe that business you want to pass on, everything from gift tax comes into play to if you’re going to have a buyer-seller agreement within the LLC as well upon the death of either spouse. So, there’s a lot of issues to deal with in that respect. I guess some simple questions are a little bit more complicated than we thought.
MATT: Well, maybe they’ll write in and give some more specifics, but that’s probably the best we can do for right now.
But, all right, let’s see the last story we have for this week. As teased earlier in the episode here, we’re going to deal with another trademark issue. I’m sure a lot of people probably heard about this because it seemed pretty ludicrous when the story came out about King.com. I think they’re the people that do Candy Crush Saga, is that the game? I’m not sure. I’ve never played it, but I’ve heard of it.
NASIR: I get invites on Facebook – or at least I used to, all the time – to play, from people I haven’t talked to in a while, but I’ve never played it either. But I know it’s popular.
MATT: I think that’s what this is referring to, but they trademarked the word “candy” and this was in Europe and they’re hoping to do the same in the US. I have no idea how that’s working out.
NASIR: So, if we can pause for a second, people might be asking, “How do you trademark a very common word like candy?” The concept is that, in general, descriptive terms which this would be, generally, you can’t. Candy is a dictionary word. There’s nothing special to it. but, when you associate that mark with something specific, and now you’ve developed it so that this candy word is associated with it, a good example is Facebook. Now, Facebook owns the word “face” and “book” as trademarks for all social media-related websites. So, if Myspace wanted to change it to Myface or Mybook…
MATT: Myface.com?
NASIR: Yeah, that’s a great example, and don’t steal that idea, Myspace. It’s mine. They would, of course, be in trouble with infringing a trademark. So, in the same respect, if King.com is able to secure a trademark, a national trademark for the word “candy” in the United States in association with – I don’t know what their class would be – online games, for example, then that would definitely be prohibitive for anyone else that wants to create a game with the word “candy” in it.
MATT: That’s Bookface – a popular social media website. That’s an Office reference. But, anyway, basically, as a result of this company trademarking “candy,” there’s a backlash. I think they even called it a hackathon. Developers are protesting this by trying to come up with as many different games as possible that have the word “candy” in it. So, Epic Candy Crushing Game.
NASIR: They submitted a huge number of games to the App Store, I think – 141 – and I think you were naming some of them, right? Epic Candy Crushing Game, Candy’s Crush Saka – saka or saga? Oh, saka, I guess – and Candy Hooker Saga. So, we didn’t come up with it.
But this is a good example of how trademarks can sometimes backlash in the public media. There’s been different examples. I even had to deal with this for a client as well. They owned this copyright of an image of a descriptive term of the area that they’re in, a localized area. It was a nickname for the area and we were debating whether we should trademark it or not.
The problem is, well, are we really going to enforce it? Because this is part of the local area. We wanted people starting to use this name and so it’d be kind of weird. If we actually trademark and start enforcing it, people may not even like it. It kind of defeats the whole purpose, and it’s happened in the past. I remember this one Hell’s Kitchen show where one of the restaurant owners trademarked a name for local area – and this is the thought that I was basing it upon – and they ended up enforcing it, and the people in the community turned against them.
MATT: Yeah, this is just a typical expected backlash. Developers were upset, and I guess rightfully so. It’s kind of ridiculous what was happening, but just a little funny story to send off here on the end of the podcast.
NASIR: Yeah, very good.
All right. What episode are we on? I’m starting to lose track of our number – not that I had a good track at the beginning.
MATT: At the beginning, you used to make jokes about it, but now you actually don’t know what episode.
NASIR: Okay. Now, I don’t know what it is. I feel, if I were to guess, it’d be like 15?
MATT: 17 – close.
NASIR: 17? Oh, okay, very good. I don’t really pay attention to what we’re doing here.
MATT: If anyone wants to send in their own question or own candy-named game, it’s ask@legallysoundsmartbusiness.com.
NASIR: Of course, check out our website and you can see, you can submit online as well.
All right, well, thank you for listening and we’ll talk to you – well, no – we’ll produce another show for you to listen to next week.
MATT: And keep it sound and keep it smart!
NASIR: Have a good one!

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